[Click eStock] "Cheonbo, Growth Expectations Rise with Expansion Effects and Portfolio Diversification..."

Shinhan Investment Corp. maintained its 'Buy' rating and target price of 330,000 KRW for Cheonbo on the 20th.

Cheonbo has experienced sluggish stock performance following an operating profit of 11.1 billion KRW in the fourth quarter of last year. This is attributed to weakened demand from customers for its main products, secondary battery materials and electronic materials, as well as profitability deterioration due to price reductions.

Growth continues. Despite the weak fourth-quarter results, Cheonbo recorded an operating profit of 56.5 billion KRW in 2022. As a materials company, it also posted a stable operating profit margin (OPM) of 17.2% in 2022, which is a positive sign.

This year's growth is also noteworthy. The current stock price has fallen 37% from the 2022 peak, and high growth is expected along with the expansion effects in 2023. Demand from customers is expected to improve, and production of new additives will also expand. Accordingly, operating profit in the second half of this year is expected to reach 55.4 billion KRW, indicating high growth. If the utilization rate of the expanded facilities increases in the second half, upward revisions of earnings estimates are also possible.

Not only the expansion effect but also portfolio diversification is a notable point. Production capacity is planned to be expanded from 5,900 tons at the end of 2022 to an additional 18,000 tons this year. By product, LiFSI will be around 9,000 tons, and FEC and VC will each be about 4,000 tons. The general-purpose product LiPO2F2 is also expected to be expanded by approximately 1,000 tons. Portfolio diversification enables stable profitability and the advantage of delivering customized products tailored to customer demand.

Oh Kang-ho, a researcher at Shinhan Investment Corp., analyzed, "Cheonbo is a company with production technology in electrolytes and additives among secondary battery companies," and added, "Profitability improvement through product diversification is also an investment point to watch."